In the past two weeks, both Microsoft and Google began testing display-style ads that appear on search results for select brand queries. Many see the introduction of these ads as a money grab to get brands to pay for traffic they would otherwise get for free, an assault on SEO, and the further “brandification” of SERPs that caters to large companies (and hurt smaller ones). Others see it as search maturing toward traditional advertising and a natural extension of a more visually-driven Internet.

“There are a number of different ways to spin these latest initiatives by the engines to create more graphical appeal on the SERP,” says George Michie, Co-Founder & Chief Marketing Scientist at search agency RKG. “The engines make the case that people respond better to graphics, as the success of PLAs demonstrates, and that they are simply evolving the SERP to reflect what users want. A critic will say it is just one more ‘land-grab’ of ads at the expense of organic listings. From the advertisers perspective owning the brand SERP real estate seems important and worth the price paid.”

The brands participating in these tests are not paying market rates, yet — Microsoft has said no money is changing hands during the Hero Ads pilot, and Google won’t comment, but it often doesn’t charge for tests — so it’s not clear what brands will be willing to pay for these ads, but plenty of prominent companies are in on the tests. The Home Depot, Land Rover, Walt Disney and Radio Shack are participating in the Hero Ads pilot. Nike, Sports Authority, Virgin America, and several other big names are running Google Visual Search Ads.

Mike Gullaksen, SVP and Managing Director at search marketing agency Covario, says, “We see this an incredible opportunity for brands to control and own the experience as it relates to search. Search has been evolving as a much more visual medium for a while. The brand ads that Google and Bing are creating are bridging the gap between what is considered more traditional brand advertising and the performance-oriented direct response nature of search.”

“Microsoft Hero Ads are ads within the interface based upon the exact brand being searched. So at the moment, since Smart Search doesn’t exist for most users (I have a windows 8.1 machine and I don’t see these smart search results), this is a way for Microsoft to start to monetize these queries by getting large brands thinking about advertising within the operating system on keyword terms. As OS advertising has been mostly limited to bloatware add-ons at the time a computer is built and purchased, this is a mindset change for many companies, and the Hero Ads are essentially branded landing pages within the OS. As there isn’t anything to compare them to at the moment, its new revenue for Microsoft. As the OS search becomes more integrated into Bing, or a user is given a choice of search provider, then we’ll have to see how these compare to showing an actual search result with more typical PPC ads.”

Taking a circumspect view of Google’s legal battles regarding competitive ads, Geddes adds, “Google fought a number of brands in the courts for several years in order to show ads for competitor terms in search results. These large brand ads go against the competitive nature of buying keywords on competitor terms. Now, due to how quality score works, the number of competitors on branded terms has dropped for many brands over the past year, so this might be Google trying to both appease brands while still showing ads for branded terms. I don’t know the terms of these deals, so this is only speculation. However, with the knowledge graph displacing many competitor’s ads to begin with, this just seems a natural extension of giving brands back their dominance of search results, and with ads, being able to monetize those queries at the same time.”

Covario’s Gullaksen, agrees that the two tests are different, “Microsoft’s Bing Hero ads are taking the experience several steps further actually integrating the desktop/tablet experience with search and a holistic brand message right in your Windows 8.1 operating system. You will see a lack of competition from resellers, channel partners and affiliates within the Bing experience, as well as big bold images and links leading to popular additional info.” Gullaksen says it will be interesting to see how Microsoft balances the Hero Ads with the loss of competing ads on brand search results.

Yet, in Bing’s Smart Search, Microsoft has said there is the possibility for other non-brand ads to display on brand queries. On Google, however, the competition is shut out entirely with Visual Search Ads. While many brands have little, if any, ad competition on their brand SERPs, many do have ads from affiliates, resellers, and competitors (though to a lesser extent these days) appearing on their brand results. For example, online travel consolidators and travel agencies such as Expedia and Travelocity can currently run ads for the brand keyword “delta airlines”. With Visual Search Ads, only the brand banner for will Delta show.

Whether it will make sense for companies to run brand ads, RKG’s George Michie says it should depend, noting “that ‘brands’ are not all created equal from the standpoint of business models. Zappos is a great brand, but as a reseller of other brands. United Airlines sells directly, but also through online and offline travel agencies with whom it competes. Ford sells nothing directly, only through dealerships. The logic of whether commanding more paid space on a SERP makes sense may be dictated as much by what is being displaced as by anything.”

So, will many brands jump at the chance to pay to own their brand real estate in search results? It seems the safe bet is, yes. Larry Kim, founder & CTO, Wordstream, says, “Branded organic searches are typically just navigational queries – meaning the intent of the searcher is to visit the brand’s homepage. Therefore, companies with strong brands ought to be very interested in providing a much stronger branded experience than a 25 character headline, and would also prefer if there were fewer competitor ads on the SERP. The new ad format delivers on both counts. If the ad format is successful, it should put to rest the decade old question about ‘should I advertise on my branded keywords?’ (answer: YES). It should also be great for Google investors as I estimate that just under 20 percent of searches on Google are navigational/branded searches, and the new rich ad format will definitely suck up a lot of clicks on the page.”

Echoing that sentiment, Michie says, “An argument could be made that branding on ads that appear only after your brand has successfully generated a search is a bit odd, but from a pragmatist’s perspective, most companies would rather get that traffic directly even if they have to pay for it, rather than have affiliates sneak in.”

Covario’s Gullaksen thinks the introduction of display-style ads brings search more in-line with traditional approach to brand advertising that will appeal to companies, “We believe this will only create compelling user experiences, multiple call to actions, less competition and improved brand reputation from search. Ultimately this will lead to an alignment of mix-media advertising investments, where in the past their was misalignment with many enterprise brands. Google is taking a traditional approach with AdWords brand banners effectively creating more real estate for the brand marketer and a program that could be categorized as new opportunity for Above The Line (ATL) advertising.”

Still, Michie cautions companies not to get too caught up in this new focus on brand search results, “Ultimately, search marketing activities, paid and organic, should be focused on the competitive non-brand search traffic. What happens after someone has expressed interest in your brand (by conducting a search) is much less interesting and important than what prompted the person to search for your brand instead of a competitors.”

About The Author

Ginny Marvin is Third Door Media's Editor-in-Chief, managing day-to-day editorial operations across all of our publications. Ginny writes about paid online marketing topics including paid search, paid social, display and retargeting for Search Engine Land, Marketing Land and MarTech Today. With more than 15 years of marketing experience, she has held both in-house and agency management positions. She can be found on Twitter as @ginnymarvin.